In a recent work, Associate Professor Jianli Wang and his coauthor examine the effects of ambiguity aversion on saving and insurance decisions by allowing for a three-way separation between risk preferences, beliefs, and time preferences. Their work is accepted by the Journal of Risk and Insurance on July 2018. “The Journal of Risk and Insurance (JRI) is the premier outlet for theoretical and empirical research on the topics of insurance economics and risk management. JRI  is the flagship journal for the American Risk and Insurance Association founded in 1932” (see its website, https://onlinelibrary.wiley.com/journal/15396975) and only publishes about 36 articles per annum.

When there is ambiguity about a future state in intertemporal decisions, e.g. saving and insurance decisions, their work allows for a three-way separation between intertemporal substitution, risk aversion, and ambiguity aversion. Holding risk preferences, beliefs, and time preferences fixed, it explores how a change in ambiguity aversion increases the strength of the current willingness to pay. It also provides applications on saving and insurance problems.

Read the paper “Comparative Ambiguity Aversion in Intertemporal Decisions,” accepted in the Journal of Risk and Insurance.